In Sheetz v. County of El Dorado, California, published April 12, 2024, the United States Supreme Court reversed the decision of a California Court of Appeal. The plaintiff wanted to build a small prefabricated home on his residential parcel of land for his grandson to live in. The General Plan that the county board of supervisors adopted--a legislative act--requires developers to pay a traffic impact fee as a condition of receiving a building permit. The county uses the proceeds to fund road improvements. The fee amount is determined by a rate schedule, rather than the cost specifically attributable to the particular project. The plaintiff applied for a permit to build the home. As a condition for receiving the permit, the county required the plaintiff to pay a traffic impact fee of $23,420, per the rate schedule. The plaintiff paid the fee under protest. He then filed suit in state court. He asserted that conditioning the permit on paying the fee was an unlawful exaction under the Takings Clause of the U.S. Constitution. He argued the Supreme Court's Nollan and Dolan decisions required the county to make an individualized determination the fee amount was necessary to offset traffic congestion attributable to his specific development. The trial court rejected the claim. The court of appeal affirmed. The appellate court asserted that the Nollan/Dolan test applies only to permit conditions imposed on an individual and discretionary basis, and not those imposed on a broad class of property owners through legislative action. The California Supreme Court denied review. State courts have reached different conclusions on whether the Takings Clause recognizes a distinction between legislative and administrative conditions on land-use permits.
The Supreme Court unanimously concluded that the Takings Clause and the Nollan/Dolan test apply regardless of whether the permit condition is imposed generally by a statute, or individually upon a landowner by administrative action. The concern behind the Nollan/Dolan test is avoiding abuse in imposing permit conditions. It therefore requires that permit conditions have an "essential nexus" to the government's land-use interest, and have "rough proportionality" to the development's impact on that interest. Neither the Constitution's text, the history of takings, nor Supreme Court precedent regarding regulatory takings support exempting legislatively-imposed permit conditions from this test. Indeed, historically legislation was the conventional way that governments exercised their eminent domain power. there is no basis for affording property rights less protection in the hands of legislators than administrators. The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits. The county conceded at oral argument that legislative conditions on building permits are not exempt form Nollan/Dolan scrutiny. The court vacated the court of appeal's decision and remanded the case for further proceedings.